Vallibel Finance reports robust Sept. profits on loans, higher margins

Vallibel Finance PLC delivered a yet another robust financial performance for the three months to September 2021, as the licensed finance company continued to defy the pandemic-induced pressures and the prolonged ban on vehicle imports as loans grew while the profits soared for the second quarter in a row. 

The company reported a net interest income of Rs.1.41 billion in its fiscal second quarter ended in September 2021, up 48.1 percent from the same period last year, as the growth in interest income outstripped the growth in interest expenses by a large margin, reflecting that the rising lending rates have boded well for the non-bank lender to further stretch its interest margins. 

The data through September-end showed that the interest rates spreads between lending and deposit rates have widened towards the tail of the quarter before the gap being widened further with the August policy rate hike. 
The company reported earnings of Rs.12.42 per share or Rs.731.3 million for the July-September quarter, up 122.5 percent from the same quarter in the corresponding period in 2020. 

Fee incomes also rose by a robust 66.6 percent on year to Rs.141.8 million. The company provided Rs.191.5 million for possible bad loans and impairments on other financial assets in the quarter, up from Rs.163.3 million in the year earlier period. 

Vallibel Finance became the first finance company to release its interim results for the September quarter, as the earnings season is slowly coming into full swing with mostly watched banking sector earnings are also expected by next week, which would provide some deeper understanding to what extent the broader financial sector fared during the semi-lockdowns prevailed in the second half of the year. 

Investors are pushing Sri Lanka’s stocks to fresh highs almost daily in expectations of a strong spell of earnings in the September quarter, largely shrugging off the concerns on rising interest rates. 

Vallibel Finance gave loans and leases worth of Rs.7.2 billion in the six months to September 2021, of which most came during the September quarter, which translated into a robust 15 percent increase in the first half of the fiscal year. The company had a loans and leases portfolio of just under Rs.55 billion by September-end. 

The company is one of the better players in the industry for lower non-performing loans relative to the industry average as its gross non-performing loan rate was at 4.81 percent by the end of the quarter, slightly changed from June.  While it’s too early for the data to be out on the September industry average, the licensed finance company sector gross non-performing loans ratio by June 2021 rose to 12.99 percent.  

The company saw its deposits rising by Rs.2.89 billion in the six months to Rs.35.1 billion while it raised Rs.7.1 billion from other borrowings to fund its robust loan growth.  The company remains well capitalised and operates with adequate liquidity to support its growth aspirations in the remainder of the year. 

Vallibel Investments Private Limited, the investment vehicle of the billionaire businessman Dhammika Perera, effectively controls 73 percent of Vallibel Finance.